PUBLIC WORKS WITHOUT BORROWING.

Timaru Herald, Volume XIIC, Issue 13918, 1 June 1909, Page 2

PUBLIC WORKS WITHOUT BORROWING.

To the Editor of the "Timaru Herald." Sir, —In reply to your leader of May 12th, 1 may say that I used the terms bank and banners thinking 1 snoulcl be better understood by the man in the street. Let tlie reader substitute •■lender"' for bank and banker, and the idea I wished to convey will be the same. You say it is not the bonds, etc-., that is security to the lender. '• The security consists in the honesty and ability to pay of the people, who lodged them." That is so; but then the lender would hare no enforceable claim on the borrower without the bonds, hence it is customary to speak of them as security. To prove that I'm wrong in saying municipal paper (bonds) is safer than banker's ditto you say ; ',banks sometimes fail to "keep their promises; but .so too do borrowers, the Oamaru Harbour Board (for instance.)" I remember the Colonial Bank failure, and the other bank that was saved by an advance of £2,000,000 from the public treasury, two failures out of the five or six banks trading in the Dominion against one public body cut of the'hundreds in the country. The odds quite big enough, surely, to prove that public bodies aro safer than private ones. Yon say one of the basal fallacies of these schemes is the neglect to take time into account. But the time argument cuts two ways. If the capitalist did not put his surplus capital to use, time, and a very short time probably, would dissipate it, then he would lose both capital and interest. Capital can only lie preserved by employing labour to keep it intact. One economist believes the time is not far distant when the capitalist will be glad to pay the user of his capital to save it from dissipation instead of being paid for its use. Then you say, " to talk about burdening posterity with a debt is to ignore the benefit the debt provides for them." But if the water supply could have been installed without borrowing, as I believe it could, the benefit of it (which I don't ignore, it's too palpable to be ignored), would have been there without the burden. It is strange that the individual man will make" considerable sacrifice for his own posterity to shield it from life's storms, while the collective man will sav with the man in the story, "hang posterity, what lias posterity done for mo." As to the examples I gave being small affairs, they are big enough to prove the thing possible, and surely small instalments of public necessities without borrowing would lie worth while if only for saving some interest. Hut enough of this. The question is: Can our Governments and municipalities do ■.virhout tin- bankers and moneylenders, or can they not? Our Council has power to levy rates to the amount of £IO.OOO. say. That money is for material and services required by the corporation. It is just the same as if it had £16.000 in gold in its coffers, because it has the jwwer to call for that- amount from its citizens. Then why should it not issue notes up to that amount, as required, and pay for its material and labour with them, at the same time agreeing to accept them for rates. The backing behind the iiob-s would be just as effective as that behind hank notes, and it is the backing that makes these safe currency. The «ame with public works. The Council has just got power to call for £24,0(30 from its citizens. The

£24,000- is as safe as gold. Hut to give the citizens plenty oi' time to fork uiit 'the money we must borrow tlie £*24,000 from some strangers, and pay them a thousand a year for twentyfour years to repay the loan, and-pos-terity must pay £IOOO a year for another .twenty-four years for the .use of the loan. Wouldn't it be wiser of us, and fairer, to posterity, to issue £24,000 in notes .of our. own, and.save the other £24.000 for 'other publicworks:' —I am, etc., . E. WOOD.

[These questions contain their own answer in the reference to time. No one would willingly give £1 worth of goods or services now, in return for a promise to accept the debt of £1 for them in payment of rates at some future time, even only six months distant. Within narrow limits such promissory notes might pass current, but to suppose that tens of thousands could be utilised is to shut one's eyes to the fact that the people could not use so much paper money. The. surplus must be stowed away. The people would have given goods or services, and have nothing in return but pieces of paper of no immediate use to them. Mr Wood should set the Mississipi Bubble and the French assignats against the Guernsey market.—Editor T.H.]